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Housing Market "is Going Bust'

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THE glut of unsold new houses in the United States rose to record levels in June while sales fell 3pc, heightening fears that America's property slowdown is accelerating into a full-fledged bust.

The US Commerce Department said yesterday that sales had dropped 11pc over the past year, led by a 29pc drop in the north east region.

The slight rebound in sales over the spring appears to have lost momentum, leaving a record overhang of new properties on the market equal to 6.1 months supply.

"The US housing market has entered recession," said Paul Kasriel, chief economist of the Northern Trust in Chicago, "The Federal Reserve has already raised rates too far and if it continues to tighten the probability of an economic recession in 2007 goes up geometrically," he said.

"Every downturn is longer and deeper than people expect: we are assuming the worst," he said. Rival builder MDC Holdings said its cancellation rate had reached 43pc.

The dollar saw a rollercoaster day as traders tried to square the housing data with a 3.1pc rebound in durable good orders, led by demand for aircraft and defence. The greenback ended down heavily against the yen and the euro for the second day as the market unwound bets on further US rate rises.

Average house prices have fallen from $244,000 to $236,000 since April. The slide is certain to slow the pace of home equity withdrawals, which topped $600bn last year and served as the primary "cash machine" for over-stretched US shoppers.

Florida home sales have dropped 30pc over the past year, with a plunge in apartment sales of 47pc in Tampa and 31pc in Miami.

The slide is spreading rapidly to the West Coast, where the California Association of Realtors is predicting a 16.8pc fall in total housing sales in 2006.

The precipitous fall could have a major knock-on effect for jobs since over 500,000 people in California are registered estate agents.

Rick Wolff, a professor of economics as the University of Massachusetts, said soaring property prices - up 13pc in 2005 alone - had driven a growth in consumer spending at a time when real wages had been largely stagnant.

"The US working class took on levels of personal and household debt never before seen in this country," he said. "The housing boom is going bust and will, unless offset by some equally massive economic improvement elsewhere, take the US economy down with it. No offsetting economic change is now on the horizon."

:o:o:o

WHEN THE US SNEEZES, THE UK CATCHES A COLD.

SOFT LANDING, ANYONE?

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Cracking article. Read it this am hardcopy. Still not on the website tho. There's a really funny quote from America's biggest homebuilder, DR Horton Inc, who said June sales "absolutely fell off the Richter scale."

Yep, that's right, June sales didn't just:

1 ) Fall off a cliff, or

2 ) Go off the scale, or

3 ) Impact at 9 on the Richter scale.

No siree, they plum did 'em all :lol::lol:

When folks mix metaphors that badly, in my experience, it means one of two things: 1 ) they are stupid, 2 ) they are just blurting out raw emotion - ie THE TRUTH.

No prizes for guessing which I'd go with on this ocassion.

Edited by Sledgehead

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.. but of course, none of that could happen over here, because, as we all know, in the UK, house prices only go up.

It must be true, it says so in the Daily Express. I think. At least there were some words there, but I couldn't actually read them - because I'm an Express "reader." Thus my IQ is only 2.

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.. but of course, none of that could happen over here, because, as we all know, in the UK, house prices only go up.

It must be true, it says so in the Daily Express. I think. At least there were some words there, but I couldn't actually read them - because I'm an Express "reader." Thus my IQ is only 2.

Ah, but who needs to be able to read when you can HEAR Kirsty saying the same. That, you see, is the best proof of all!

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.. but of course, none of that could happen over here, because, as we all know, in the UK, house prices only go up.

It must be true, it says so in the Daily Express. I think. At least there were some words there, but I couldn't actually read them - because I'm an Express "reader." Thus my IQ is only 2.

The Daily Express had a headline the other day that August will be even hotter than July, and that 'experts' are saying we will top the August 2003 record. The expert was some dodgy guy from a weather website, and they based their entire story on the fact that the first week in August is statistically the hottest. Long range forecasts show the first half of August being relatively cool, and no chance at all of temps above 100. They really are pathetic, and it gives me heart that they are predicting a house price boom, as it almost certainly means there won't be.

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.. as we all know, in the UK, house prices only go up.

This must be the most misquoted statement on this website. The bears are always wheeling it out, yet I've never actually heard anyone say it. People may well say something like "in the long term, property is a good investment" or "over a period, the trend in prices is upwards". Both of these are absolutely true. But no one, surely, has ever said (seriously) that "house prices only go up", meaning that there are no dips or cyclical downturns.

History shows us that HPI continues, punctuated by periodic corrections.

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This must be the most misquoted statement on this website. The bears are always wheeling it out, yet I've never actually heard anyone say it. People may well say something like "in the long term, property is a good investment" or "over a period, the trend in prices is upwards". Both of these are absolutely true. But no one, surely, has ever said (seriously) that "house prices only go up", meaning that there are no dips or cyclical downturns.

History shows us that HPI continues, punctuated by periodic corrections.

10 years ago I would have agreed with you. However, today people have become used to living in a "Miracle Economy" and as Gordon promised, there will be no more boom and bust. Well, we have had the boom and now people believ it will keep going just at Gordon promised. IMO, no more boom and bust is as likely as peace in our time. Popular perception is houses only go up whereas reality is, as we all know, something quite different.

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Cracking article. Read it this am hardcopy. Still not on the website tho. There's a really funny quote from America's biggest homebuilder, DR Horton Inc, who said June sales "absolutely fell off the Richter scale."

Yep, that's right, June sales didn't just:

1 ) Fall off a cliff, or

2 ) Go off the scale, or

3 ) Impact at 9 on the Richter scale.

No siree, they plum did 'em all :lol::lol:

When folks mix metaphors that badly, in my experience, it means one of two things: 1 ) they are stupid, 2 ) they are just blurting out raw emotion - ie THE TRUTH.

No prizes for guessing which I'd go with on this ocassion.

Be careful who you're accusing of stupidity on this "ocassion". I'm missing something that seems very obvious to you. I wonder if you'd recognise a good mixed metaphor if you tripped over one because you let go of the tiller?

The only problem with the metaphor is that I don't think the Richter scale has a limit. But if you imagine that it does have a notional limit, then all the bloke is saying is that the earthquake-like impact of the drop in sales will be so big that the current way of measuring it can't cope.

The metaphor is stupid in that it's a gross exaggeration, but I don't see that it's a mixed metaphor at all.

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10 years ago I would have agreed with you. However, today people have become used to living in a "Miracle Economy" and as Gordon promised, there will be no more boom and bust. Well, we have had the boom and now people believ it will keep going just at Gordon promised. IMO, no more boom and bust is as likely as peace in our time. Popular perception is houses only go up whereas reality is, as we all know, something quite different.

And I just don't agree with your conclusion that "popular perception is houses only go up". People might say something that sounds like that but you're taking them too literally. Anyone who reads a newspaper or watches the TV news will know that house price inflation has slowed right down and in some areas has actually fallen. Anyone over 12 years old will remember the last serious house price correction. There is a general truth that house prices like stock markets continue to rise over the long term, which is what people are referring to. Everyone must know and accept that there will be dips along the way. Sometimes they are deep dips, even crashes, but the markets and property have always recovered to break new records. That's what people mean, surely.

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Anyone over 12 years old will remember the last serious house price correction.

:lol::lol::lol::lol::lol:

Tell me you meant 21, pleeeease!!! (And frankly, even that's too young to remember what really counts, i.e. 1989-1992.)

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talking to a guy i know yesterday who is a director of a company who is heavily into new builds for several national house builders. To keep it short, the general theme was that several sites were almost at a standstill, and one of the builders ( a major one at that ) had let it be known to their sub contractors that nothing new will be started untill next year, and one new site which is at foundation level has been shut and covered over with top soil!!. Not even going to build the show house. He also said, that on good authority, they, being the builders, have run out of incentives to offer joe public to get them through the sales office door. No more we'll pay your mortgage for a year crap etc etc, theres only one option left, cut prices..

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talking to a guy i know yesterday who is a director of a company who is heavily into new builds for several national house builders. To keep it short, the general theme was that several sites were almost at a standstill, and one of the builders ( a major one at that ) had let it be known to their sub contractors that nothing new will be started untill next year, and one new site which is at foundation level has been shut and covered over with top soil!!. Not even going to build the show house. He also said, that on good authority, they, being the builders, have run out of incentives to offer joe public to get them through the sales office door. No more we'll pay your mortgage for a year crap etc etc, theres only one option left, cut prices..

Same as I'm seeing on the ground too , all the signals are there I have to say and been there since last year imho.

Dames

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And I just don't agree with your conclusion that "popular perception is houses only go up". People might say something that sounds like that but you're taking them too literally. Anyone who reads a newspaper or watches the TV news will know that house price inflation has slowed right down and in some areas has actually fallen. Anyone over 12 years old will remember the last serious house price correction. There is a general truth that house prices like stock markets continue to rise over the long term, which is what people are referring to. Everyone must know and accept that there will be dips along the way. Sometimes they are deep dips, even crashes, but the markets and property have always recovered to break new records. That's what people mean, surely.

"And I just don't agree with your conclusion that "popular perception is houses only go up". People might say something that sounds like that but you're taking them too literally."

Is that some kind of joke? Is that why the masses have jumped right in and bought prices at astronomical levels - because they think the value of their property will go down? I don't think so. People have bought in because they think they'll make a massive profit. They've all been watching all the property porn shows on the telly.

Edited by The Dude

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"And I just don't agree with your conclusion that "popular perception is houses only go up". People might say something that sounds like that but you're taking them too literally."

Is that some kind of joke? Is that why the masses have jumped right in and bought prices at astronomical levels - because they think the value of their property will go down? I don't think so. People have bought in because they think they'll make a massive profit. They've all been watching all the property porn shows on the telly.

Read what I wrote, you idiot.

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More on the BUST coming from accross the pond:

http://www.keynoter.com/articles/2006/07/2...iness/biz01.txt

Existing home sales down 29 percent

By Associated Press

Posted-Friday, July 28, 2006 9:06 AM EDT

Sales go down as interest rates go up
Existing home sales in Florida decreased 29 percent last month as the booming housing market slowed under rising mortgage rates, inventory levels and insurance premiums, although home prices climbed slightly, a Realtor's association reported Tuesday.

The rising prices usually means fewer, more expensive, homes are selling as the normal rule is that supply affects demand which in turn impacts pricing.

http://yahoo.reuters.com/news/ArticleHybri...51-23_N25145429

Mortgage lenders grapple with deflating housing bubble

Wed Jul 26, 2006 3:51pm ET254
By Al Yoon
NEW YORK, July 26 (Reuters) - Downward momentum in the U.S. housing market is leading some of America's biggest mortgage lenders to adapt business plans for even softer demand.
The lenders are launching new cost cuts and risk reduction strategies that suggest growing concern that the outlook is worsening for the $9.5 trillion home mortgage industry.
It marks another racheting down of expectations for the big players in a housing market where slowing sales have pushed inventories up 39 percent in the past year and set home prices on the path of decline, some analysts said. Builders of new homes, meantime, reported the lowest confidence about their prospects in June than anytime in the past 14 years.
Lenders are bracing for further declines.
"I've never seen a soft-landing in 53 years
, so we have a ways to go before this levels out," Countrywide Chief Executive Officer Angelo Mozilo said on a Tuesday conference call. "I have to prepare the company for the worst that can happen."

:)

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Be careful who you're accusing of stupidity on this "ocassion". I'm missing something that seems very obvious to you. I wonder if you'd recognise a good mixed metaphor if you tripped over one because you let go of the tiller?

The only problem with the metaphor is that I don't think the Richter scale has a limit. But if you imagine that it does have a notional limit, then all the bloke is saying is that the earthquake-like impact of the drop in sales will be so big that the current way of measuring it can't cope.

The metaphor is stupid in that it's a gross exaggeration, but I don't see that it's a mixed metaphor at all.

Get a grip - gross exaggeration is hyperbole.

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You really are genuinely thick in that case.

To quote Brass again:

"And I just don't agree with your conclusion that "popular perception is houses only go up". People might say something that sounds like that but you're taking them too literally."

Brass....straight question: Do you think that people buying a house today, at the back of their minds, think that "I could make a profit out of this"? And please enough of the personal juvenile insults.....

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To quote Brass again:

"And I just don't agree with your conclusion that "popular perception is houses only go up". People might say something that sounds like that but you're taking them too literally."

Brass....straight question: Do you think that people buying a house today, at the back of their minds, think that "I could make a profit out of this"? And please enough of the personal juvenile insults.....

Straight answer? Yes, of course they think that.

Did I ever say anything that said otherwise?

My point, which wasn't a very subtle or difficult one is this: that when people say words to the effect of "Prices always go up" they don't mean that totally literally i.e. that there can never be short-term drops. They mean that "Property is a good investment. Prices will go up over a period of time". And they are absolutely right.

What they are not saying (surely to god) is that under no circumstances will property ever be lower one month than it was last month. There is property right now, as we speak, that has a 'value' lower than it did last month and last quarter. This is not a state secret. People know and accept that the market rises and falls but that over the long term, HPI will rise. It will happen. We all know it. And that is what people mean when they say words like "property prices always go up".

What do you dispute here, or what don't you understand?

If you were offended by my language, I apologise, but really, this is a very simple point that I'm making.

Edited by brassfarthing

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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